Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 01, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Bone Biologics Corp | |
Entity Central Index Key | 0001419554 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity's Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 30,682,590 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash | $ 201,834 | $ 955,374 |
Prepaid expenses | 47,511 | 85,288 |
Total current assets | 249,345 | 1,040,662 |
Property and equipment, net | 50 | |
Total assets | 249,345 | 1,040,712 |
Current liabilities | ||
Accounts payable and accrued expenses | 253,982 | 197,220 |
Notes payable - related party | 11,200,000 | 9,000,000 |
Deferred compensation | 177,500 | 441,667 |
Total current liabilities | 11,631,482 | 9,638,887 |
Commitments and Contingencies | ||
Stockholders' deficit | ||
Preferred Stock, $0.001 par value per share; 20,000,000 shares authorized; none issued or outstanding at September 30, 2019 and December 31, 2018 | ||
Common stock, $0.001 par value per share; 100,000,000 shares authorized; 30,682,590 and 26,448,881 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 30,682 | 26,449 |
Additional paid-in capital | 55,096,266 | 54,990,797 |
Accumulated deficit | (66,509,085) | (63,615,421) |
Total stockholders' deficit | (11,382,137) | (8,598,175) |
Total liabilities and stockholders' deficit | $ 249,345 | $ 1,040,712 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 30,682,590 | 26,448,881 |
Common stock, shares outstanding | 30,682,590 | 26,448,881 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenues | ||||
Cost of revenues | ||||
Gross profit | ||||
Operating expenses | ||||
Research and development | 44,942 | (1,065,691) | 1,026,840 | (509,221) |
General and administrative | 256,368 | 660,900 | 1,142,965 | 2,061,304 |
Total operating expenses | 301,310 | (404,791) | 2,169,805 | 1,552,083 |
Income (Loss) from operations | (301,310) | 404,791 | (2,169,805) | (1,552,083) |
Other expenses | ||||
Interest expense, net - related party | (260,070) | (238,234) | (722,220) | (997,727) |
Loss on debt extinguishment - related party | (408,294) | (408,294) | ||
Total other expenses | (260,070) | (646,528) | (722,220) | (1,406,021) |
Loss before provision for income taxes | (561,380) | (241,737) | (2,892,025) | (2,958,104) |
Provision for income taxes | 39 | 7 | 1,639 | 1,607 |
Net Loss | $ (561,419) | $ (241,744) | $ (2,893,664) | $ (2,959,711) |
Weighted average shares outstanding - basic and diluted | 7,292,268 | 7,393,788 | 7,294,799 | 5,398,506 |
Loss per share - basic and diluted | $ (0.08) | $ (0.03) | $ (0.40) | $ (0.55) |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Deficit (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Common Stock to be Issued [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 4,328 | $ 48,961,794 | $ 1,823,077 | $ (59,185,022) | $ (8,395,823) |
Balance, shares at Dec. 31, 2017 | 4,328,080 | ||||
Fair value of vested stock options issued to employees and directors | 195,795 | 195,795 | |||
Fair value of unvested stock options issued to consultant | 171,891 | 171,891 | |||
Shares issued for cash | $ 25 | 492,475 | 492,500 | ||
Shares issued for cash, shares | 25,000 | ||||
Fair value of shares issued in settlement of bonus Payable | $ 23 | 455,977 | 456,000 | ||
Fair value of shares issued in settlement of bonus Payable, shares | 23,147 | ||||
Shares issued to related party upon net settlement of warrants | $ 17 | (17) | |||
Shares issued to related party upon net settlement of warrants, shares | 16,706 | ||||
Net Loss | (1,454,640) | (1,454,640) | |||
Balance at Mar. 31, 2018 | $ 4,393 | 50,277,915 | 1,823,077 | (60,639,662) | (8,534,277) |
Balance, shares at Mar. 31, 2018 | 4,392,933 | ||||
Balance at Dec. 31, 2017 | $ 4,328 | 48,961,794 | 1,823,077 | (59,185,022) | (8,395,823) |
Balance, shares at Dec. 31, 2017 | 4,328,080 | ||||
Fair value of shares issued in settlement of bonus Payable | 456,000 | ||||
Net Loss | (2,959,711) | ||||
Balance at Sep. 30, 2018 | $ 8,439 | 54,961,803 | (62,144,733) | (7,174,491) | |
Balance, shares at Sep. 30, 2018 | 8,439,185 | ||||
Balance at Mar. 31, 2018 | $ 4,393 | 50,277,915 | 1,823,077 | (60,639,662) | (8,534,277) |
Balance, shares at Mar. 31, 2018 | 4,392,933 | ||||
Fair value of vested stock options issued to employees and directors | 195,795 | 195,795 | |||
Fair value of unvested stock options issued to consultant | 146,014 | 146,014 | |||
Shares issued to related party upon net settlement of warrants | $ 14 | (14) | |||
Shares issued to related party upon net settlement of warrants, shares | 14,140 | ||||
Shares issued to related party under anti-dilution provision | $ 47 | (47) | |||
Shares issued to related party under anti-dilution provision, shares | 46,667 | ||||
Net Loss | (1,263,326) | (1,263,326) | |||
Balance at Jun. 30, 2018 | $ 4,454 | 50,619,663 | 1,823,077 | (61,902,988) | (9,455,794) |
Balance, shares at Jun. 30, 2018 | 4,453,740 | ||||
Fair value of vested stock options issued to employees and directors | 101,163 | 101,163 | |||
Fair value of unvested stock options issued to consultant | (1,448,094) | (1,448,094) | |||
Shares issued to related party for cash | $ 3,540 | 3,536,114 | 3,539,654 | ||
Shares issued to related party for cash, shares | 3,539,654 | ||||
Shares issued upon close of rights offering (including 329,674 shares to related parties) | $ 330 | 329,995 | 330,325 | ||
Shares issued upon close of rights offering (including 329,674 shares to related parties), shares | 330,325 | ||||
Share adjustment for stock split rounding | |||||
Share adjustment for stock split rounding, shares | 81 | ||||
Issuance pursuant founders agreement | $ 115 | 1,822,962 | (1,823,077) | ||
Issuance pursuant founders agreement, shares | 115,385 | ||||
Net Loss | (241,745) | (241,744) | |||
Balance at Sep. 30, 2018 | $ 8,439 | 54,961,803 | (62,144,733) | (7,174,491) | |
Balance, shares at Sep. 30, 2018 | 8,439,185 | ||||
Balance at Dec. 31, 2018 | $ 26,449 | 54,990,797 | (63,615,421) | (8,598,175) | |
Balance, shares at Dec. 31, 2018 | 26,448,881 | ||||
Fair value of vested stock options issued to employees and directors | 25,724 | 25,724 | |||
Fair value of unvested stock options issued to consultant | 5,965 | 5,965 | |||
Shares issued to related party for collateral pursuant to secured convertible note agreement | $ 1,489 | 1,489 | |||
Shares issued to related party for collateral pursuant to secured convertible note agreement, shares | 1,489,362 | ||||
Net Loss | (1,406,693) | (1,406,693) | |||
Balance at Mar. 31, 2019 | $ 27,938 | 55,022,486 | (65,022,114) | (9,971,690) | |
Balance, shares at Mar. 31, 2019 | 27,938,243 | ||||
Balance at Dec. 31, 2018 | $ 26,449 | 54,990,797 | (63,615,421) | (8,598,175) | |
Balance, shares at Dec. 31, 2018 | 26,448,881 | ||||
Fair value of shares issued in settlement of bonus Payable | |||||
Net Loss | (2,893,664) | ||||
Balance at Sep. 30, 2019 | $ 30,682 | 55,096,266 | (66,509,085) | (11,382,137) | |
Balance, shares at Sep. 30, 2019 | 30,682,590 | ||||
Balance at Mar. 31, 2019 | $ 27,938 | 55,022,486 | (65,022,114) | (9,971,690) | |
Balance, shares at Mar. 31, 2019 | 27,938,243 | ||||
Fair value of vested stock options issued to employees and directors | 13,548 | 13,548 | |||
Fair value of unvested stock options issued to consultant | 26,458 | 26,458 | |||
Shares issued to related party for collateral pursuant to secured convertible note agreement | $ 2,128 | 2,128 | |||
Shares issued to related party for collateral pursuant to secured convertible note agreement, shares | 2,127,660 | ||||
Net Loss | (925,552) | (925,552) | |||
Balance at Jun. 30, 2019 | $ 30,066 | 55,062,492 | (65,947,666) | (10,855,108) | |
Balance, shares at Jun. 30, 2019 | 30,065,903 | ||||
Fair value of vested stock options issued to employees and directors | 7,294 | 7,294 | |||
Fair value of unvested stock options issued to consultant | 26,458 | 26,458 | |||
Shares issued to related party for collateral pursuant to secured convertible note agreement | $ 638 | 638 | |||
Shares issued to related party for collateral pursuant to secured convertible note agreement, shares | 638,297 | ||||
Forfeit restricted shares | $ (22) | 22 | |||
Forfeit restricted shares, shares | (21,610) | ||||
Net Loss | (561,419) | (561,419) | |||
Balance at Sep. 30, 2019 | $ 30,682 | $ 55,096,266 | $ (66,509,085) | $ (11,382,137) | |
Balance, shares at Sep. 30, 2019 | 30,682,590 |
Consolidated Statement of Sto_2
Consolidated Statement of Stockholders' Deficit (Unaudited) (Parenthetical) | 3 Months Ended |
Sep. 30, 2018shares | |
Statement of Stockholders' Equity [Abstract] | |
Shares issued upon close of rights offering, related parties | 329,674 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Cash flows from operating activities | |||||||
Net loss | $ (561,419) | $ (1,406,693) | $ (241,744) | $ (1,454,640) | $ (2,893,664) | $ (2,959,711) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation | 50 | 72 | |||||
Debt discount amortization | 340,735 | ||||||
Debt issuance costs amortization | 21,283 | ||||||
Stock-based compensation | 46,566 | 492,754 | |||||
Options issued to consultants | 58,881 | (1,130,189) | |||||
Loss on debt extinguishment | 408,294 | 408,294 | $ (408,294) | ||||
Forfeiture of deferred compensation | (379,167) | ||||||
Issuance costs of shares issued to related party for collateral pursuant to convertible secured note agreement | 4,255 | ||||||
Changes in operating assets and liabilities: | |||||||
Prepaid expenses and other current assets | 37,777 | 41,623 | |||||
Accounts payable and accrued expenses | 56,762 | (131,001) | |||||
Deferred compensation | 115,000 | 150,000 | |||||
Net cash used in operating activities | (2,953,540) | (2,766,140) | |||||
Cash flows from financing activities | |||||||
Proceeds from issuance of common stock | 4,369,979 | ||||||
Repayment of note payable | (600,000) | ||||||
Proceeds from issuance of notes payable | 2,200,000 | 600,000 | |||||
Net cash provided by financing activities | 2,200,000 | 4,369,979 | |||||
Net increase (decrease) in cash | (753,540) | 1,603,839 | |||||
Cash, beginning of period | $ 955,374 | 690,279 | 955,374 | 690,279 | 690,279 | ||
Cash, end of period | $ 201,834 | $ 2,294,118 | 201,834 | 2,294,118 | $ 955,374 | ||
Supplemental non-cash information | |||||||
Interest paid | 717,965 | 389,519 | |||||
Taxes paid | 1,639 | 1,607 | |||||
Supplemental non-cash investing and finance activities: | |||||||
Prepaid offering costs netted against proceeds from issuance of common stock | 7,500 | ||||||
Shares issued in settlement of bonus payable | $ 456,000 | $ 456,000 |
The Company
The Company | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company | 1. The Company Bone Biologics Corporation (the “Company”) was incorporated under the laws of the State of Delaware on October 18, 2007 as AFH Acquisition X, Inc. Pursuant to a Merger Agreement, dated September 19, 2014, by and among the Company, its wholly-owned subsidiary, Bone Biologics Acquisition Corp., a Delaware corporation (“Merger Sub”), and Bone Biologics, Inc. Merger Sub merged with and into Bone Biologics Inc., with Bone Biologics Inc. remaining as the surviving corporation in the merger. Upon the consummation of the merger, the separate existence of Merger Sub ceased. On September 22, 2014, the Company officially changed its name to “Bone Biologics Corporation” to more accurately reflect the nature of its business and Bone Biologics, Inc. became a wholly owned subsidiary of the Company. Bone Biologics, Inc. was incorporated in California on September 9, 2004. On July 16, 2018, the Company closed a rights offering in which Hankey Capital purchased 3,539,654 shares of the Company’s Common Stock and executed amendments (the “Amendments”) to the convertible promissory notes (the “Existing Convertible Notes”) payable to Hankey Capital and dated October 24, 2014, May 4, 2015 and February 24, 2016. The Amendments reduced the conversion price of the Existing Convertible Notes from $15.80 per share to $1.00 per share and extended the maturity date of the February 24, 2016 convertible promissory note from February 24, 2019 to December 31, 2019. As a result of the share issuance and Amendments, Hankey Capital and Don Hankey, the Chairman of the Company’s Board of Directors, acquired a majority of the voting common shares issued and outstanding and thus effective control of the Company. We are a medical device company that is currently focused on bone regeneration in spinal fusion using the recombinant human protein, known as NELL-1/DBX®. The NELL-1/DBX® combination product is an osteostimulative recombinant protein that provides target specific control over bone regeneration. The protein, as part of the UCB-1 technology platform, has been licensed exclusively for worldwide applications to us through a technology transfer from UCLA Technology Development Group on behalf of UC Regents (“UCLA TDG”). UCLA TDG and the Company received guidance from the FDA that NELL-1/DBX® will be classified as a combination product with a device lead. We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act. We would cease to be an emerging growth company upon the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues are $1.07 billion or more; (ii) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700.0 million as of the end of the second quarter of that fiscal year; or (iii) the date on which we have, during the previous three-year period, issued more than $1.07 billion in non-convertible debt securities. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. We have elected to take advantage of these reduced disclosure obligations, and may elect to take advantage of other reduced reporting obligations in the future. The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to irrevocably “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted. The production and marketing of the Company’s products and its ongoing research and development activities will be subject to extensive regulation by numerous governmental authorities in the United States. Prior to marketing in the United States, any combination product developed by the Company must undergo rigorous preclinical (animal) and clinical (human) testing and an extensive regulatory approval process implemented by the FDA under the Food, Drug and Cosmetic Act. There can be no assurance that the Company will not encounter problems in clinical trials that will cause the Company or the FDA to delay or suspend clinical trials. The Company’s success will depend in part on its ability to obtain patents and product license rights, maintain trade secrets, and operate without infringing on the proprietary rights of others, both in the United States and other countries. There can be no assurance that patents issued to or licensed by the Company will not be challenged, invalidated, or circumvented, or that the rights granted thereunder will provide proprietary protection or competitive advantages to the Company. Going Concern and Liquidity The Company has no significant operating history and since inception to September 30, 2019 has incurred accumulated losses of approximately $66.5 million. The Company will continue to incur significant expenses for development activities for their lead product NELL-1/DBX®. Operating expenditures for the next twelve months are estimated at $2.6 million. The accompanying consolidated financial statements for the period ended September 30, 2019 have been prepared assuming the Company will continue as a going concern. As reflected in the financial statements, the Company had a stockholders’ deficit of $11,382,137 at September 30, 2019, and incurred a net loss of $2,893,664, and used net cash in operating activities of $2,953,540 during the nine months ended September 30, 2019. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In addition, our independent accounting firm, in its audit report to the financial statements included in our Annual Report for the year ended December 31, 2018, expressed substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company will continue to attempt to raise additional debt and/or equity financing to fund future operations and to provide additional working capital. However, there is no assurance that such financing will be consummated or obtained in sufficient amounts necessary to meet the Company’s needs. If cash resources are insufficient to satisfy the Company’s on-going cash requirements, the Company will be required to scale back or discontinue its product development programs, or obtain funds if available (although there can be no certainties) through strategic alliances that may require the Company to relinquish rights to its technology, substantially reduce or discontinue its operations entirely. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing. For the past several years, we have depended on our relationship with Hankey Capital for working capital to fund our operations, which has been raised in the form of both debt and equity capital. Hankey Capital, directly and indirectly, controls approximately 89% of our issued and outstanding shares of common stock (including collateral shares) and has been issued convertible notes payable with an aggregate principal balance of $11,200,000 at September 30, 2019. Representatives of Hankey Capital also currently serve as directors of the Company. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing. At September 30, 2019, the Company had $900,000 available under the second credit facility with Hankey Capital. Pursuant to the October 2016 Note Purchase Agreement, the Company’s management has agreed to defer 20% of earned compensation and the Board of Directors has authorized a change in director compensation to defer 50% of the directors’ cash compensation until at least $5,000,000 has been received in cumulative funding from non-current stockholders. Reverse Stock Split Effective July 24, 2018, the Company effected a reverse split of the common stock of the Company on a basis of 1 new common share for 10 old common shares. All references in these financial statements to number of common shares, price per share and weighted average number of shares outstanding prior to the 1 for 10 reverse split have been adjusted to reflect the stock split on a retroactive basis as of the earliest period presented, unless otherwise noted. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The interim condensed consolidated financial statements included herein reflect all material adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) which, in the opinion of management, are ordinary and necessary for a fair presentation of results for the interim periods. Certain information and footnote disclosures required under the accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated balance sheet information as of December 31, 2018 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2019 (the “2018 Annual Report”). These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2018 and notes thereto included in the 2018 Annual Report. The results of operations for the nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the entire fiscal year ended December 31, 2019 or for any other period. Reclassification Certain accounts totaling $64,274 previously reflected in the prior-period financial statements as research and development expense have been reclassified to general and administrative expense to conform to the presentation in the current-period financial statements. Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Significant estimates include the assumptions used in the accrual for potential liabilities, the valuation of stock options and warrants issued for services, and deferred tax valuation allowances. Actual results could differ from those estimates. Fair Value of Financial Instruments The Company’s consolidated financial instruments are cash, accounts payable and notes payable. The recorded values of cash and accounts payable approximate their values based on their short-term nature. The fair value of convertible notes payable approximate their fair value since the current interest rates and terms on these obligations are the same as prevailing market rates. The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last is considered unobservable: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 assumptions: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities including liabilities resulting from embedded derivatives associated with certain warrants to purchase common stock. An “established trading market” for the Company’s common stock does not exist. The fair value of the shares was determined based on the then most recent price per share at which we sold common stock to unrelated parties in a private placement during the periods then ended. During the period January 1, 2018 through September 30, 2018, the Company utilized $20.00 (post reverse split) per share as the fair value of its common stock for accounting purposes based on one common stock transaction with an investor during March 2018. Subsequently, based on the analysis as described below, management determined that the fair value of the Company’s common stock for accounting purposes was $0.94 per share. In drawing its conclusions, management considered various relevant factors, including the work of an independent third party valuation firm engaged to provide a valuation analysis as of July 24, 2018, which indicated a valuation of $0.94 per common share. Management also took into account the recent cash transaction price for the Company’s common stock pursuant to a July 2018 Rights Offering to all common stockholders, which resulted in the sale of common shares to an affiliate of the Company and parties related to such affiliate at a slightly higher price of $1.00 per share. The Company entered into a series of interrelated transactions with such affiliate at the same $1.00 price per share during the year ended December 31, 2018. The July 24, 2018 valuation analysis employed the discounted future value method and utilized financial metrics observed in the marketplace. Management ultimately determined, and the valuation firm concurred, that the discounted future value method was the most appropriate valuation methodology under the circumstances. The utilization of the discounted future value method involved the estimation of a business enterprise value (“BEV”)/revenue multiple, the probability of approval of the Company’s technology, the estimation of the Company’s cost of equity and weighted average cost of capital, the estimation of a required rate of return appropriate for discounting projected revenues to calculate the present value of the business enterprise, and an appropriate discount period. This method involved projecting revenues through 2028 and applying an appropriate BEV/revenue multiple. Stock Based Compensation ASC 718, Compensation – Stock Compensation Improvements to Nonemployee Share-Based Payment Accounting In light of the lack of an “established trading market”, the fair value of the shares was determined based on the discounted future value valuation methodology. Pursuant to ASU No. 2016-09 – Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, Prior to January 1, 2019, the Company accounted for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity – based Payments to Non-Employees Collateral Shares The Company accounts for the common shares issued as collateral for convertible promissory notes, whether upon original issuance or upon the required annual adjustment, as debt issuance costs in the form of a loan processing fee, which is determined by reference to the par value of the Company’s common stock, with a corresponding charge to operations when such collateral shares are issued. The collateral shares are subject to significant contractual restrictions limiting their sale or transfer. As these common shares have been issued to and are held by the lender, and are contingently returnable to the Company under certain conditions, such shares are considered as issued and outstanding on the Company’s balance sheet, but are not included in earnings per share calculations for all periods presented. In the event of an uncured event of default, the Company will record a charge to operations to recognize that the collateral shares are no longer owned or controlled by the Company, and such prospective charge to operations would be based on the fair market value of the collateral shares at that time, and which would be classified as a cost of debt capital and recognized as a charge to operations. As of September 30, 2019 and December 31, 2018, there are 23,404,255 and 19,148,936 shares outstanding that have been issued for collateral. Loss per Common Share The Company utilizes FASB ASC Topic No. 260, Earnings per Share Since the effects of outstanding options, warrants, and the conversion of convertible debt are anti-dilutive for the period ended September 30, 2019 and 2018, shares of common stock underlying these instruments have been excluded from the computation of loss per common share. The following sets forth the number of shares of common stock underlying outstanding options, warrants, and convertible debt as of September 30, 2019 and 2018: September 30, 2019 2018 Warrants 828,590 860,919 Stock options 566,045 843,648 Convertible promissory notes 11,200,000 7,860,760 12,594,635 9,565,327 New Accounting Standards In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has evaluated the impact of the adoption of ASU 2016-02 on the Company’s financial statement presentation or disclosures and determined no effect since we have no leases with terms longer than 12 months. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | 3. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following: September 30, 2019 December 31, 2018 Accounts payable $ 137,612 $ 125,203 Severance 31,227 - Deferred Directors’ fees 85,143 72,017 $ 253,982 $ 197,220 |
Notes Payable - Related Party
Notes Payable - Related Party | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable - Related Party | 4. Notes Payable - Related Party Hankey Capital LLC (Hankey Capital) Hankey Capital holds certain convertible notes of the Company as discussed below. Don Hankey, the CEO and Chairman of Hankey Group, is our non-independent Chairman of the Board and a significant shareholder. Bret Hankey, the president of Hankey Capital, is a non-independent board member. The Hankey Group is an affiliate of Hankey Capital. Note Type Issue Maturity Interest March 31, December 31, 2018 (A) First Secured Convertible Note 10/24/14 12/31/19 9.00 % $ 5,000,000 $ 5,000,000 (A) Second Secured Convertible Note 5/4/15 12/31/19 9.00 % 2,000,000 2,000,000 (B) Third Secured Convertible Note 2/24/16 12/31/19 9.00 % 2,000,000 2,000,000 (C) First Credit Facility 3/19/19 12/31/19 9.00 % 2,000,000 - (D) Second Credit Facility 9/19/19 9/19/20 9.00 % 200,000 - Notes payable $ 11,200,000 $ 9,000,000 First and Second Secured Convertible Notes and Warrants (A) On October 24, 2014 and May 4, 2015, the Company issued two convertible promissory notes in the aggregate amount of $7,000,000 to Hankey Capital. Don Hankey, the CEO and Chairman of Hankey Group, is our non-independent Chairman of the Board and a significant shareholder. Bret Hankey, the president of Hankey Capital, is a non-independent board member. The Convertible Notes mature on December 31, 2019 and bear interest at an annual rate of interest of the “prime rate” plus 4.0%, with a minimum rate of 8.5% per annum until maturity, with interest payable monthly in arrears. Prior to the Maturity Date, Hankey Capital has a right, in its sole discretion, to convert the Convertible Notes into shares of the Company’s Common Stock, at a conversion rate equal to $1.00 per share. The Company also issued warrants to Hankey Capital for an aggregate of 585,443 shares of Common Stock at an exercise price per share of $15.80 that expire five years from the dates of issuance. In connection with the Convertible Notes, the Company paid commitment fees in the amount of $210,000 (3.0% of the original principal amount of the loans) to Hankey Capital and other aggregate offering costs of $594,550. The aggregate value of the warrants and offering costs totaling $2,891,409 was considered to be a debt discount upon issuance of the notes and was fully amortized as of December 31, 2018. The notes are secured by collateral shares as described below. Third Convertible Secured Term Note and Warrants (B) On February 24, 2016, the Company issued a convertible promissory note in the amount of $2,000,000 to Hankey Capital. The Third Convertible Note matures on December 31, 2019 (the “Maturity Date”) and bears interest at an annual rate of interest at the “prime rate” plus 4.0%, with a minimum rate of 8.5% per annum until maturity, with interest payable monthly in arrears. Prior to the Maturity Date, Hankey Capital has a right, in its sole discretion, to convert the Convertible Note into shares of the Company’s common stock (the “Conversion Shares”), at a conversion rate equal to $1.00 per share and issued a warrant to Hankey Capital for 146,342 shares of Common Stock at an exercise price per share of $20.50. The Warrant will expire on February 23, 2021. In connection with the Convertible Note, the Company paid a commitment fee in the amount of $40,000 (2.0% of the original principal amount of the Loan) and other offering costs totaling $77,532. The aggregate value of the warrant, beneficial conversion feature and offering costs of $2,000,000 was considered a debt discount upon issuance of the note and was fully amortized as of December 31, 2018. The note is secured by collateral shares as described below. First Credit Facility Convertible Secured Term Note (C) On July 24, 2018, the Company and Hankey Capital entered into an agreement under which Hankey Capital will provide a credit facility of $2,000,000 to the Company to be drawn down by the Company upon notice to Hankey Capital. The credit facility is evidenced by a convertible secured note convertible prior to the maturity date at $1.00 per share and due on December 31, 2019. Draws bear interest at an annual rate of interest at the “prime rate” (as quoted in the “Money Rates” section of The Wall Street Journal) plus 4.0%, with a minimum rate of 8.5% per annum until maturity, with interest payable monthly in arrears. At September 30, 2019, the Company had used all funds available under the facility. At December 31, 2018, the Company had $2,000,000 available under the facility. The note is secured by collateral shares as described below. During the nine months ended September 30, 2019, the Company drew $2,000,000 on the credit facility. The Company issued 4,255,319 Collateral Shares pursuant to the agreement. Second Credit Facility Convertible Secured Term Note (D) On September 19, 2019, the Company and Hankey Capital entered into an agreement under which Hankey Capital will provide a credit facility of $1,100,000 to the Company to be drawn down by the Company upon notice to Hankey Capital. The credit facility is evidenced by a convertible secured note convertible prior to the maturity date at $1.00 per share and due on September 19, 2020. All personal property and assets of the Company secure the note. Draws bear interest at an annual rate of interest at the “prime rate” (as quoted in the “Money Rates” section of The Wall Street Journal) plus 4.0%, with a minimum rate of 8.5% per annum until maturity, with interest payable monthly in arrears. At September 30, 2019, the Company had been advanced $200,000 and had $900,000 available under the facility. No Collateral Shares are required pursuant to this convertible secured note. Collateral The Convertible Notes (A), (B) and (C) are secured by an aggregate of 23,404,255 and 19,148,936 collateral shares of Common Stock issued by the Company in the name of Hankey Capital, in such amount so as to maintain a loan to value ratio equal to 50% (the “Collateral Shares”). The number of shares as of September 30, 2019 and December 31, 2018, respectively, in the Collateral Shares shall be adjusted on a yearly basis. The principal amount of the loans are pre-payable in whole or in part at any time, without premium or penalty. Upon any voluntary partial prepayment of outstanding principal, Hankey Capital will return Collateral shares to the Company in the amount necessary, if any, to maintain the loan to value ratio at no less than 50%. Upon a full payment of the outstanding principal, all Collateral Shares shall be returned return and cancelled. Hankey Capital will also return Collateral Shares under the same terms in case of partial or full conversion of the Convertible Notes. All of the Company’s personal property further secure the aggregate Convertible Notes, including collateral assignments of all the Company’s license agreements and the MTF Sygnal Option Agreement. Debt Amendments On February 24, 2016, the First and Second Secured Convertible Notes were modified to extend the maturity date to December 31, 2019, fix the conversion price at $15.80 and the warrants were amended to extend their expiration date by two years. The Company determined that the extension of the convertible notes’ maturity dates and the warrants’ expiration dates resulted in a debt extinguishment for accounting purposes since the change in fair value of the warrants as a result of the extension of their expiration dates was more than 10% of the original value of the convertible notes. As such, the Company recorded the notes at their aggregate fair value of $7,000,000. In connection with the financing that closed on July 16, 2018, the Company and Hankey Capital executed amendments (the “Amendments”) to the First, Second and Third convertible secured term notes (the “Existing Convertible Notes”). The Amendments change Hankey Capital’s conversion price from $15.80 per share to $1.00 per share on a post reverse stock split basis on the Existing Convertible Notes and extends the maturity date of the Third Convertible Note from February 24, 2019 to December 31, 2019. The Amendments became effective on the closing of the rights offering, July 16, 2018. The Company determined that the change in the conversion prices of the Existing Convertible Notes and extension of the Third Convertible Note’s maturity date resulted in debt extinguishments for accounting purposes since the change in fair value of the conversion options was more than 10% of the original value of the Existing Convertible Notes. During the year ended December 31, 2018, the Company recorded a loss on extinguishment of debt totaling $408,294 for the remaining unamortized debt discount. The total debt discount amortization related to our outstanding debt for the periods ended September 30, 2019 and 2018, was $-0- and $340,735, respectively. The unamortized debt discount at September 30, 2019 and December 31, 2018 was $-0-. During 2018, $383,861 of debt discount was written off as a result of the debt extinguishment. The total debt issuance amortization related to our outstanding debt for the periods ended September 30, 2019 and 2018, was $-0- and $21,283, respectively. The unamortized debt discount at September 30, 2019 and December 31, 2018 was $-0-. During 2018, $24,433 of debt issuance costs were written off as a result of the debt extinguishment. |
Stockholders' Deficit
Stockholders' Deficit | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Deficit | 5. Stockholders’ Deficit Preferred Stock The Company’s amended and restated certificate of incorporation authorizes the Company to issue a total of 20,000,000 shares of preferred stock. No shares have been issued. Common Stock The Company’s amended and restated certificate of incorporation authorizes the Company to issue a total of 100,000,000 shares of common stock. As of September 30, 2019 and December 31, 2018, the Company had an aggregate of 30,682,590 and 26,448,881 shares of common stock outstanding, respectively. During the nine months ended September 30, 2019, the Company issued 4,255,319 Collateral Shares pursuant to a convertible secured note payable agreement (see Note 4). On August 1, 2019, the Company cancelled 21,610 Common Shares due to the separation of the former Chief Executive Officer and the change in contract terms for the Chief Financial Officer. Common Stock Warrants A summary of warrant activity for the period ended September 30, 2019 is presented below: Number of Weighted Average Weighted Average Subject to Exercise Warrants Price Life (Years) Outstanding as of December 31, 2018 845,096 $ 4.94 1.40 Granted – 2019 - - - Forfeited/Expired – 2019 (16,506 ) - - Exercised – 2019 - - - Outstanding as of September 30, 2019 828,590 $ 4.92 0.68 As of September 30, 2019, the Company had outstanding vested and unexercised Common Stock Warrants as follows: Date Issued Exercise Price Number of Warrants Expiration date 2010 $ 4.40 22,659 February 4, 2020 April 2013 $ 10.00 5,000 April 28, 2020 September 2013 $ 10.00 5,000 September 4, 2020 September 2013 $ 10.00 2,500 September 20, 2020 November 2013 $ 10.00 7,500 November 14, 2020 July 2014 $ 10.00 50,000 September 30, 2020 September 2014 $ 16.20 62,500 August 31, 2021 September 2014 $ 10.00 11,800 September 18, 2021 September 2014 $ 10.00 8,959 September 29, 2021 October 2014 $ 15.80 316,456 October 23, 2019 May 2015 $ 15.80 189,874 May 4, 2020 February 2016 $ 20.50 146,342 February 23, 2021 Total outstanding warrants at September 30, 2019 828,590 There were no common stock warrants exercised and 16,506 warrants expired during the period ended September 30, 2019. The intrinsic value of the outstanding warrants on September 30, 2019 is $-0-. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | 6. Stock-based Compensation 2015 Equity Incentive Plan The Company has 1,400,000 shares of Common Stock authorized and reserved for issuance under our 2015 Equity Incentive Plan for option awards. This reserve may be increased by the Board each year by up to the number of shares of stock equal to 5% of the number of shares of stock issued and outstanding on the immediately preceding December 31. Appropriate adjustments will be made in the number of authorized shares and other numerical limits in our 2015 Equity Incentive Plan and in outstanding awards to prevent dilution or enlargement of participants’ rights in the event of a stock split or other change in our capital structure. Shares subject to awards granted under our 2015 Equity Incentive Plan which expire, are repurchased or are cancelled or forfeited will again become available for issuance under our 2015 Equity Incentive Plan. The shares available will not be reduced by awards settled in cash. Shares withheld to satisfy tax withholding obligations will not again become available for grant. The gross number of shares issued upon the exercise of stock appreciation rights or options exercised by means of a net exercise or by tender of previously owned shares will be deducted from the shares available under our 2015 Equity Incentive Plan. Awards may be granted under our 2015 Equity Incentive Plan to our employees, including officers, director or consultants, and our present or future affiliated entities. While we may grant incentive stock options only to employees, we may grant non-statutory stock options, stock appreciation rights, restricted stock purchase rights or bonuses, restricted stock units, performance shares, performance units and cash-based awards or other stock based awards to any eligible participant. The 2015 Equity Incentive Plan is administered by our compensation committee. Subject to the provisions of our 2015 Equity Incentive Plan, the compensation committee determines, in its discretion, the persons to whom, and the times at which, awards are granted, as well as the size, terms and conditions of each award. All awards are evidenced by a written agreement between us and the holder of the award. The compensation committee has the authority to construe and interpret the terms of our 2015 Equity Incentive Plan and awards granted under our 2015 Equity Incentive Plan. A summary of stock option activity for the period ended September 30, 2019, is presented below: Number of Weighted Average Exercise Weighted Average Aggregate Intrinsic Subject to Exercise Options Price Life (Years) Value Outstanding as of December 31, 2018 843,648 $ 16.43 6.56 $ - Granted – 2019 54,909 $ 0.94 10.00 - Forfeited – 2019 (332,512 ) 16.64 4.99 - Exercised – 2019 - - - - Outstanding as of September 30, 2019 566,045 $ 14.80 5.86 $ - As of September 30, 2019, the Company had outstanding stock options as follows: Date Issued Exercise Price Number of Options Expiration date September 2014 $ 15.90 58,307 December 27, 2025 August 2015 $ 15.90 104,060 December 27, 2025 September 2015 $ 15.90 20,000 December 27, 2025 November 2015 $ 15.90 122,464 December 27, 2025 December 2015 $ 15.90 27,204 December 27, 2025 January 2016 $ 15.90 127,581 January 9, 2026 March 2016 $ 20.50 5,400 February 24, 2021 May 2016 $ 20.50 26,915 May 26, 2026 September 2016 $ 20.50 9,933 May 31, 2026 January 2017 $ 20.50 5,356 January 1, 2027 January 2018 $ 19.70 3,916 January 1, 2028 January 2019 $ 0.94 54,909 January 1, 2029 Total outstanding options at September 30, 2019 566,045 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value ( i.e. There were 54,909 options granted with a fair value of $50,000 during the period ended September 30, 2019. Vesting of options differs based on the terms of each option. The Company has valued the options at their date of grant utilizing the Black-Scholes option pricing model. As of the issuance of these condensed consolidated financial statements, there was no active public market for the Company’s shares. Accordingly, the fair value of the options was determined based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options as calculated using the simplified method. The expected life of the options used was based on the contractual life of the option granted. Stock-based compensation is a non-cash expense because we settle these obligations by issuing shares of our common stock from our authorized shares instead of settling such obligations with cash payments. During the periods ended September 30, 2019 and 2018, the Company had stock-based compensation expense of $46,566 and $492,754, respectively, related to the vesting of stock options granted to the Company’s employees and directors included in our reported net loss. During the nine months ended September 30, 2019, 332,514 options forfeited due to the separation of the former Chief Executive Officer and the change in contract terms for the Chief Financial Officer. During the nine months ended September 30, 2018, 1,306 options forfeited upon the resignation of one of our directors. Stock compensation expense for stock options granted to consultants recognized in the statement of operations amounted to $58,881 and $(1,130,189) , respectively. The Company utilized the Black-Scholes option pricing model. The assumptions used for the periods ended September 30, 2019 and 2018 are as follows: September 30, 2019 September 30, 2018 Risk free interest rate 2.554 % 2.302%-2.790 % Expected life (in years) 6.24 6.24-7.75 Expected Volatility 169.87 % 169.33%-173.79 % Expected dividend yield 0 % 0 % A summary of the changes in the Company’s non-vested options during the period ended September 30, 2019, is as follows: Number of Non-vested Options Weighted Average Fair Value at Grant Date Non-vested at December 31, 2018 117,464 $ 14.61 Granted in 2019 54,909 $ 0.91 Forfeited in 2019 (82,364 ) $ 13.55 Vested in 2019 41,182 $ 0.91 Non-vested at September 30, 2019 131,191 $ 14.72 Exercisable at September 30, 2019 434,854 $ 13.66 Outstanding at September 30, 2019 566,045 $ 13.91 As of September 30, 2019, total unrecognized compensation cost related to unvested stock options was $25,175. The cost is expected to be recognized over a weighted average period of 0.25 years. |
Deferred Compensation
Deferred Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Compensation | |
Deferred Compensation | 7. Deferred Compensation Pursuant to an October 2016 Note Purchase Agreement, the Company’s management had agreed to defer 20% of earned compensation until at least $5,000,000 has been received in cumulative funding from non-current stockholders. Effective June 28, 2019, the Letter Agreement dated June 8, 2015 between the Company and Stephen LaNeve, the Company’s then President and Chief Executive Officer, and the Letter Agreement dated October 13, 2015 between the Company and Deina Walsh, the Company’s Chief Financial Officer, each relating to such individual’s employment with the Company, were not renewed by those employees. Each has entered into an independent contractor’s agreement with the Company. As a result of the separation agreements, $379,167 of deferred compensation was forfeited and written off. As of September 30, 2019 and December 31, 2018, deferred compensation was $177,500 and $441,667, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies Contingencies The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company’s management does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. In July 2019, Dr. Bessie (Chia) Soo and Dr. Kang (Eric) Ting (“Plaintiffs”) filed a complaint (the “Complaint”) in federal court in Massachusetts against the Company, Bruce Stroever (“Stroever”), John Booth (“Booth”), Stephen LaNeve (“LaNeve”, and together with Stroever and Booth, the “Individual Defendants”), and MTF Biologics (f/k/a The Musculoskeletal Transplant Foundation, Inc.) (“MTF”). The Complaint alleges claims for breach of contract against the Company and tortious interference with contract against the Individual Defendants and MTF arising from the termination of the Professional Service Agreements, dated as of January 8, 2016, between the Company and each of the Plaintiffs. The Individual Defendants have been sued for actions taken by them in connection with their service to the Company as directors and/or officers of the Company. As such, the Company has certain indemnification obligations to the Individual Defendants. The Company and the Individual Defendants intend to vigorously defend against the allegations in the Complaint. Based on the very early stage of the litigation, it is not possible to estimate the amount or range of any possible loss arising from the expenditure of defense fees, a judgment or settlement of the matter. In July 2018, AFH Holding & Advisory, LLC, Amir Heshmatpour, Steve Richards, and Bessie (Chia) Soo (“Plaintiffs”) filed a verified shareholder derivative complaint (the “Complaint”) in Massachusetts federal court against Bruce Stroever, John Booth, Stephen LaNeve, Bret Hankey, James Delshad (the “Initial Defendants”), and The Musculoskeletal Transplant Foundation, Inc. (“MTF”), and also named the Company as a nominal defendant. The Complaint alleged claims for violation of Section 14(c) of the Securities Exchange Act of 1934, breach of fiduciary duties, rescission of a reverse stock split, and in the alternative rescissory damages. The Complaint focused on the financing transaction that the Company completed with Hankey Capital in July 2018. The Initial Defendants and the Company filed motions to dismiss on September 28, 2018. After changing counsel and obtaining several extensions of time, instead of responding to the motions to dismiss, Plaintiffs filed an Amended Complaint (the “Amended Complaint”) on February 8, 2019 as a direct, instead of derivative complaint, and added two additional defendants, Don Hankey and Hankey Capital LLC (the “Added Defendants” and together with the Initial Defendants, MTF and the Company, the “Current Defendants”). The Amended Complaint asserted claims for violation of Section 14(c) of the Securities Exchange Act of 1934, breach of fiduciary duties, aiding and abetting breach of fiduciary duties, rescission of a reverse stock split, and in the alternative rescissory damages. On February 22, 2019, the Company and the Initial Defendants filed a Motion to Dismiss the Amended Complaint. The Motion to Dismiss the Amended Complaint was granted in its entirety on July 29, 2019, with the court dismissing the claims for violation of Section 14(c) of the Securities Exchange Act of 1934 with prejudice, and dismissing the remaining claims for lack of jurisdiction. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 9. Subsequent Events The Company amended the following Convertible Promissory Notes: (a) Note dated October 24, 2014, as amended, in the principal amount of $5,000,000; (b) Note dated May 24, 2015, as amended, in the principal amount of $2,000,000; (c) Note dated February 24, 2016 in the principal amount of $2,000,000; (d) Note dated March 19, 2019 in the principal amount of $2,000,000; and (e) Note dated September 19, 2019 in the principal amount of $1,100,000 as follows: Effective October 1, 2019, interest hereon shall accrue and be payable on the maturity date. The maturity date on each note was extended to December 31, 2021. On November 12, 2019, the Company drew $35,000 of working capital under our second secured credit facility (see Note 4). |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The interim condensed consolidated financial statements included herein reflect all material adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) which, in the opinion of management, are ordinary and necessary for a fair presentation of results for the interim periods. Certain information and footnote disclosures required under the accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated balance sheet information as of December 31, 2018 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2019 (the “2018 Annual Report”). These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2018 and notes thereto included in the 2018 Annual Report. The results of operations for the nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the entire fiscal year ended December 31, 2019 or for any other period. |
Reclassification | Reclassification Certain accounts totaling $64,274 previously reflected in the prior-period financial statements as research and development expense have been reclassified to general and administrative expense to conform to the presentation in the current-period financial statements. |
Use of Estimates | Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Significant estimates include the assumptions used in the accrual for potential liabilities, the valuation of stock options and warrants issued for services, and deferred tax valuation allowances. Actual results could differ from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s consolidated financial instruments are cash, accounts payable and notes payable. The recorded values of cash and accounts payable approximate their values based on their short-term nature. The fair value of convertible notes payable approximate their fair value since the current interest rates and terms on these obligations are the same as prevailing market rates. The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last is considered unobservable: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 assumptions: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities including liabilities resulting from embedded derivatives associated with certain warrants to purchase common stock. An “established trading market” for the Company’s common stock does not exist. The fair value of the shares was determined based on the then most recent price per share at which we sold common stock to unrelated parties in a private placement during the periods then ended. During the period January 1, 2018 through September 30, 2018, the Company utilized $20.00 (post reverse split) per share as the fair value of its common stock for accounting purposes based on one common stock transaction with an investor during March 2018. Subsequently, based on the analysis as described below, management determined that the fair value of the Company’s common stock for accounting purposes was $0.94 per share. In drawing its conclusions, management considered various relevant factors, including the work of an independent third party valuation firm engaged to provide a valuation analysis as of July 24, 2018, which indicated a valuation of $0.94 per common share. Management also took into account the recent cash transaction price for the Company’s common stock pursuant to a July 2018 Rights Offering to all common stockholders, which resulted in the sale of common shares to an affiliate of the Company and parties related to such affiliate at a slightly higher price of $1.00 per share. The Company entered into a series of interrelated transactions with such affiliate at the same $1.00 price per share during the year ended December 31, 2018. The July 24, 2018 valuation analysis employed the discounted future value method and utilized financial metrics observed in the marketplace. Management ultimately determined, and the valuation firm concurred, that the discounted future value method was the most appropriate valuation methodology under the circumstances. The utilization of the discounted future value method involved the estimation of a business enterprise value (“BEV”)/revenue multiple, the probability of approval of the Company’s technology, the estimation of the Company’s cost of equity and weighted average cost of capital, the estimation of a required rate of return appropriate for discounting projected revenues to calculate the present value of the business enterprise, and an appropriate discount period. This method involved projecting revenues through 2028 and applying an appropriate BEV/revenue multiple. |
Stock Based Compensation | Stock Based Compensation ASC 718, Compensation – Stock Compensation Improvements to Nonemployee Share-Based Payment Accounting In light of the lack of an “established trading market”, the fair value of the shares was determined based on the discounted future value valuation methodology. Pursuant to ASU No. 2016-09 – Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, Prior to January 1, 2019, the Company accounted for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity – based Payments to Non-Employees |
Collateral Shares | Collateral Shares The Company accounts for the common shares issued as collateral for convertible promissory notes, whether upon original issuance or upon the required annual adjustment, as debt issuance costs in the form of a loan processing fee, which is determined by reference to the par value of the Company’s common stock, with a corresponding charge to operations when such collateral shares are issued. The collateral shares are subject to significant contractual restrictions limiting their sale or transfer. As these common shares have been issued to and are held by the lender, and are contingently returnable to the Company under certain conditions, such shares are considered as issued and outstanding on the Company’s balance sheet, but are not included in earnings per share calculations for all periods presented. In the event of an uncured event of default, the Company will record a charge to operations to recognize that the collateral shares are no longer owned or controlled by the Company, and such prospective charge to operations would be based on the fair market value of the collateral shares at that time, and which would be classified as a cost of debt capital and recognized as a charge to operations. As of September 30, 2019 and December 31, 2018, there are 23,404,255 and 19,148,936 shares outstanding that have been issued for collateral. |
Loss Per Common Share | Loss per Common Share The Company utilizes FASB ASC Topic No. 260, Earnings per Share Since the effects of outstanding options, warrants, and the conversion of convertible debt are anti-dilutive for the period ended September 30, 2019 and 2018, shares of common stock underlying these instruments have been excluded from the computation of loss per common share. The following sets forth the number of shares of common stock underlying outstanding options, warrants, and convertible debt as of September 30, 2019 and 2018: September 30, 2019 2018 Warrants 828,590 860,919 Stock options 566,045 843,648 Convertible promissory notes 11,200,000 7,860,760 12,594,635 9,565,327 |
New Accounting Standards | New Accounting Standards In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has evaluated the impact of the adoption of ASU 2016-02 on the Company’s financial statement presentation or disclosures and determined no effect since we have no leases with terms longer than 12 months. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following sets forth the number of shares of common stock underlying outstanding options, warrants, and convertible debt as of September 30, 2019 and 2018: September 30, 2019 2018 Warrants 828,590 860,919 Stock options 566,045 843,648 Convertible promissory notes 11,200,000 7,860,760 12,594,635 9,565,327 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following: September 30, 2019 December 31, 2018 Accounts payable $ 137,612 $ 125,203 Severance 31,227 - Deferred Directors’ fees 85,143 72,017 $ 253,982 $ 197,220 |
Notes Payable - Related Parties
Notes Payable - Related Parties (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | The Hankey Group is an affiliate of Hankey Capital. Note Type Issue Maturity Interest March 31, December 31, 2018 (A) First Secured Convertible Note 10/24/14 12/31/19 9.00 % $ 5,000,000 $ 5,000,000 (A) Second Secured Convertible Note 5/4/15 12/31/19 9.00 % 2,000,000 2,000,000 (B) Third Secured Convertible Note 2/24/16 12/31/19 9.00 % 2,000,000 2,000,000 (C) First Credit Facility 3/19/19 12/31/19 9.00 % 2,000,000 - (D) Second Credit Facility 9/19/19 9/19/20 9.00 % 200,000 - Notes payable $ 11,200,000 $ 9,000,000 First and Second Secured Convertible Notes and Warrants (A) On October 24, 2014 and May 4, 2015, the Company issued two convertible promissory notes in the aggregate amount of $7,000,000 to Hankey Capital. Don Hankey, the CEO and Chairman of Hankey Group, is our non-independent Chairman of the Board and a significant shareholder. Bret Hankey, the president of Hankey Capital, is a non-independent board member. The Convertible Notes mature on December 31, 2019 and bear interest at an annual rate of interest of the “prime rate” plus 4.0%, with a minimum rate of 8.5% per annum until maturity, with interest payable monthly in arrears. Prior to the Maturity Date, Hankey Capital has a right, in its sole discretion, to convert the Convertible Notes into shares of the Company’s Common Stock, at a conversion rate equal to $1.00 per share. The Company also issued warrants to Hankey Capital for an aggregate of 585,443 shares of Common Stock at an exercise price per share of $15.80 that expire five years from the dates of issuance. In connection with the Convertible Notes, the Company paid commitment fees in the amount of $210,000 (3.0% of the original principal amount of the loans) to Hankey Capital and other aggregate offering costs of $594,550. The aggregate value of the warrants and offering costs totaling $2,891,409 was considered to be a debt discount upon issuance of the notes and was fully amortized as of December 31, 2018. The notes are secured by collateral shares as described below. Third Convertible Secured Term Note and Warrants (B) On February 24, 2016, the Company issued a convertible promissory note in the amount of $2,000,000 to Hankey Capital. The Third Convertible Note matures on December 31, 2019 (the “Maturity Date”) and bears interest at an annual rate of interest at the “prime rate” plus 4.0%, with a minimum rate of 8.5% per annum until maturity, with interest payable monthly in arrears. Prior to the Maturity Date, Hankey Capital has a right, in its sole discretion, to convert the Convertible Note into shares of the Company’s common stock (the “Conversion Shares”), at a conversion rate equal to $1.00 per share and issued a warrant to Hankey Capital for 146,342 shares of Common Stock at an exercise price per share of $20.50. The Warrant will expire on February 23, 2021. In connection with the Convertible Note, the Company paid a commitment fee in the amount of $40,000 (2.0% of the original principal amount of the Loan) and other offering costs totaling $77,532. The aggregate value of the warrant, beneficial conversion feature and offering costs of $2,000,000 was considered a debt discount upon issuance of the note and was fully amortized as of December 31, 2018. The note is secured by collateral shares as described below. First Credit Facility Convertible Secured Term Note (C) On July 24, 2018, the Company and Hankey Capital entered into an agreement under which Hankey Capital will provide a credit facility of $2,000,000 to the Company to be drawn down by the Company upon notice to Hankey Capital. The credit facility is evidenced by a convertible secured note convertible prior to the maturity date at $1.00 per share and due on December 31, 2019. Draws bear interest at an annual rate of interest at the “prime rate” (as quoted in the “Money Rates” section of The Wall Street Journal) plus 4.0%, with a minimum rate of 8.5% per annum until maturity, with interest payable monthly in arrears. At September 30, 2019, the Company had used all funds available under the facility. At December 31, 2018, the Company had $2,000,000 available under the facility. The note is secured by collateral shares as described below. During the nine months ended September 30, 2019, the Company drew $2,000,000 on the credit facility. The Company issued 4,255,319 Collateral Shares pursuant to the agreement. Second Credit Facility Convertible Secured Term Note (D) On September 19, 2019, the Company and Hankey Capital entered into an agreement under which Hankey Capital will provide a credit facility of $1,100,000 to the Company to be drawn down by the Company upon notice to Hankey Capital. The credit facility is evidenced by a convertible secured note convertible prior to the maturity date at $1.00 per share and due on September 19, 2020. All personal property and assets of the Company secure the note. Draws bear interest at an annual rate of interest at the “prime rate” (as quoted in the “Money Rates” section of The Wall Street Journal) plus 4.0%, with a minimum rate of 8.5% per annum until maturity, with interest payable monthly in arrears. At September 30, 2019, the Company had been advanced $200,000 and had $900,000 available under the facility. No Collateral Shares are required pursuant to this convertible secured note. On September 20, 2019, the Company drew $200,000 on the credit facility. |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Schedule of Warrant Activity | A summary of warrant activity for the period ended September 30, 2019 is presented below: Number of Weighted Average Weighted Average Subject to Exercise Warrants Price Life (Years) Outstanding as of December 31, 2018 845,096 $ 4.94 1.40 Granted – 2019 - - - Forfeited/Expired – 2019 (16,506 ) - - Exercised – 2019 - - - Outstanding as of September 30, 2019 828,590 $ 4.92 0.68 |
Schedule of Outstanding Vested and Unexercised Common Stock Warrants | As of September 30, 2019, the Company had outstanding vested and unexercised Common Stock Warrants as follows: Date Issued Exercise Price Number of Warrants Expiration date 2010 $ 4.40 22,659 February 4, 2020 April 2013 $ 10.00 5,000 April 28, 2020 September 2013 $ 10.00 5,000 September 4, 2020 September 2013 $ 10.00 2,500 September 20, 2020 November 2013 $ 10.00 7,500 November 14, 2020 July 2014 $ 10.00 50,000 September 30, 2020 September 2014 $ 16.20 62,500 August 31, 2021 September 2014 $ 10.00 11,800 September 18, 2021 September 2014 $ 10.00 8,959 September 29, 2021 October 2014 $ 15.80 316,456 October 23, 2019 May 2015 $ 15.80 189,874 May 4, 2020 February 2016 $ 20.50 146,342 February 23, 2021 Total outstanding warrants at September 30, 2019 828,590 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | A summary of stock option activity for the period ended September 30, 2019, is presented below: Number of Weighted Average Exercise Weighted Average Aggregate Intrinsic Subject to Exercise Options Price Life (Years) Value Outstanding as of December 31, 2018 843,648 $ 16.43 6.56 $ - Granted – 2019 54,909 $ 0.94 10.00 - Forfeited – 2019 (332,512 ) 16.64 4.99 - Exercised – 2019 - - - - Outstanding as of September 30, 2019 566,045 $ 14.80 5.86 $ - |
Schedule of Outstanding Stock Options | As of September 30, 2019, the Company had outstanding stock options as follows: Date Issued Exercise Price Number of Options Expiration date September 2014 $ 15.90 58,307 December 27, 2025 August 2015 $ 15.90 104,060 December 27, 2025 September 2015 $ 15.90 20,000 December 27, 2025 November 2015 $ 15.90 122,464 December 27, 2025 December 2015 $ 15.90 27,204 December 27, 2025 January 2016 $ 15.90 127,581 January 9, 2026 March 2016 $ 20.50 5,400 February 24, 2021 May 2016 $ 20.50 26,915 May 26, 2026 September 2016 $ 20.50 9,933 May 31, 2026 January 2017 $ 20.50 5,356 January 1, 2027 January 2018 $ 19.70 3,916 January 1, 2028 January 2019 $ 0.94 54,909 January 1, 2029 Total outstanding options at September 30, 2019 566,045 |
Schedule of Assumptions Using Black-Scholes Option Pricing Model | The Company utilized the Black-Scholes option pricing model. The assumptions used for the periods ended September 30, 2019 and 2018 are as follows: September 30, 2019 September 30, 2018 Risk free interest rate 2.554 % 2.302%-2.790 % Expected life (in years) 6.24 6.24-7.75 Expected Volatility 169.87 % 169.33%-173.79 % Expected dividend yield 0 % 0 % |
Schedule of Non-vested Options | A summary of the changes in the Company’s non-vested options during the period ended September 30, 2019, is as follows: Number of Non-vested Options Weighted Average Fair Value at Grant Date Non-vested at December 31, 2018 117,464 $ 14.61 Granted in 2019 54,909 $ 0.91 Forfeited in 2019 (82,364 ) $ 13.55 Vested in 2019 41,182 $ 0.91 Non-vested at September 30, 2019 131,191 $ 14.72 Exercisable at September 30, 2019 434,854 $ 13.66 Outstanding at September 30, 2019 566,045 $ 13.91 |
The Company (Details Narrative)
The Company (Details Narrative) - USD ($) | Jul. 24, 2018 | Jul. 16, 2018 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Cessation as an emerging growth company, description | We would cease to be an emerging growth company upon the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues are $1.07 billion or more; (ii) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700.0 million as of the end of the second quarter of that fiscal year; or (iii) the date on which we have, during the previous three-year period, issued more than $1.07 billion in non-convertible debt securities | |||||||||||
Accumulated losses | $ (66,509,085) | $ (66,509,085) | $ (63,615,421) | |||||||||
Estimated operating expenditure for next twelve months | 2,600,000 | 2,600,000 | ||||||||||
Stockholders' deficit | (11,382,137) | $ (10,855,108) | $ (9,971,690) | $ (7,174,491) | $ (9,455,794) | $ (8,534,277) | (11,382,137) | $ (7,174,491) | $ (8,598,175) | $ (8,395,823) | ||
Net loss | $ (561,419) | $ (925,552) | $ (1,406,693) | $ (241,744) | $ (1,263,326) | $ (1,454,640) | (2,893,664) | (2,959,711) | ||||
Net cash in operating activities | (2,953,540) | (2,766,140) | ||||||||||
Cumulative funding to be received | $ 4,369,979 | |||||||||||
Common stock, reverse split | 1 for 10 reverse split | |||||||||||
October 2016 Note Purchase Agreement [Member] | ||||||||||||
Percentage of earned deferred compensation | 20.00% | |||||||||||
October 2016 Note Purchase Agreement [Member] | Directors [Member] | ||||||||||||
Percentage of earned deferred compensation | 50.00% | |||||||||||
Cumulative funding to be received | $ 5,000,000 | |||||||||||
Hankey Capital LLC [Member] | ||||||||||||
Ownership percentage | 89.00% | 89.00% | ||||||||||
Debt instrument principal amount | $ 11,200,000 | $ 11,200,000 | ||||||||||
Credit facility | $ 900,000 | $ 900,000 | ||||||||||
Existing Convertible Notes [Member] | Extended Maturity [Member] | ||||||||||||
Promissory note maturity date | Dec. 31, 2019 | |||||||||||
Existing Convertible Notes [Member] | Hankey Capital LLC [Member] | ||||||||||||
Conversion price of convertible notes | $ 15.80 | $ 1 | $ 1 | |||||||||
Promissory note maturity date | Feb. 24, 2016 | |||||||||||
Rights Offering [Member] | Existing Convertible Notes [Member] | Hankey Capital LLC [Member] | ||||||||||||
Shares purchased in rights offering | 3,539,654 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Jul. 24, 2018 | |
Common stock price per share | $ 0.94 | $ 20 | $ 0.94 | |
Sale of shares, price per share | $ 1 | |||
Collateral shares outstanding | 23,404,255 | 19,148,936 | ||
Anti-dilutive securities outstanding excluded from computation of diluted net loss per share | 12,594,635 | 9,565,327 | ||
Collateral Shares [Member] | ||||
Anti-dilutive securities outstanding excluded from computation of diluted net loss per share | 23,404,255 | 1,139,240 | ||
July 2018 Rights Offering [Member] | ||||
Sale of shares, price per share | $ 1 | |||
Research and Development Expense and General and Administrative Expense [Member] | ||||
Prior period reclassification adjustment | $ 64,274 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Anti-dilutive securities outstanding excluded from computation of diluted net loss per share | 12,594,635 | 9,565,327 |
Warrants [Member] | ||
Anti-dilutive securities outstanding excluded from computation of diluted net loss per share | 828,590 | 860,919 |
Stock Options [Member] | ||
Anti-dilutive securities outstanding excluded from computation of diluted net loss per share | 566,045 | 843,648 |
Convertible Promissory Notes [Member] | ||
Anti-dilutive securities outstanding excluded from computation of diluted net loss per share | 11,200,000 | 7,860,760 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 137,612 | $ 125,203 |
Severance | 31,227 | |
Deferred Directors' fees | 85,143 | 72,017 |
Total accounts payable and accrued expenses | $ 253,982 | $ 197,220 |
Notes Payable - Related Party (
Notes Payable - Related Party (Details Narrative) - USD ($) | Sep. 19, 2019 | Jul. 24, 2018 | Jul. 16, 2018 | Feb. 24, 2016 | May 04, 2015 | Oct. 24, 2014 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Debt discount amortization | $ 340,735 | ||||||||||
Line of credit facility, additional borrowings | $ 2,000,000 | ||||||||||
Number of shares of common stock issued as collateral | 4,255,319 | ||||||||||
Loss on extinguishment of debt | $ (408,294) | (408,294) | $ 408,294 | ||||||||
Amortization of debt issuance costs | 21,283 | ||||||||||
Hankey Capital LLC [Member] | Third Convertible Secured Term Note and Warrants [Member] | |||||||||||
Convertible promissory note amount | $ 2,000,000 | ||||||||||
Debt maturity date | Dec. 31, 2019 | ||||||||||
Debt instrument conversion price per share | $ 1 | ||||||||||
Warrant to purchase shares of common stock | 146,342 | ||||||||||
Warrant exercise price | $ 20.50 | ||||||||||
Loan commitment fee amount | $ 40,000 | ||||||||||
Percentage of commitment fee paid | 2.00% | ||||||||||
Offering costs | $ 77,532 | ||||||||||
Debt discount amortization | 2,000,000 | ||||||||||
Warrant expiration date | Feb. 23, 2021 | ||||||||||
Hankey Capital LLC [Member] | First Credit Facility Convertible Secured Term Note [Member] | |||||||||||
Debt instrument conversion price per share | $ 1 | ||||||||||
Line of credit facility, amount | $ 2,000,000 | ||||||||||
Line of credit facility due date | Dec. 31, 2019 | ||||||||||
Credit facility, Interest rate description | Draws bear interest at an annual rate of interest at the "prime rate" (as quoted in the "Money Rates" section of The Wall Street Journal) plus 4.0%, with a minimum rate of 8.5% per annum until maturity, with interest payable monthly in arrears. | ||||||||||
Line of credit available under facility | $ 2,000,000 | ||||||||||
Hankey Capital LLC [Member] | Second Credit Facility Convertible Secured Term Note [Member] | |||||||||||
Debt instrument conversion price per share | $ 1 | ||||||||||
Line of credit facility, amount | $ 1,100,000 | ||||||||||
Line of credit facility due date | Sep. 19, 2020 | ||||||||||
Line of credit available under facility | 900,000 | 900,000 | |||||||||
Line of credit facility in advance | 200,000 | ||||||||||
Hankey Capital LLC [Member] | First, Second and Third Convertible Secured Term Notes [Member] | |||||||||||
Debt discount amortization | $ 0 | 340,735 | |||||||||
Number of shares of common stock issued as collateral | 23,404,255 | 19,148,936 | |||||||||
Loan for collateral value ratio percentage | 50.00% | ||||||||||
Debt maturity description | Extends the maturity date of the Third Convertible Note from February 24, 2019 to December 31, 2019 | ||||||||||
Unamortized debt discount | $ 0 | $ 0 | $ 0 | ||||||||
Debt discount written off | 383,861 | ||||||||||
Amortization of debt issuance costs | $ 0 | $ 21,283 | |||||||||
Debt issuance costs written off | 24,433 | ||||||||||
Hankey Capital LLC [Member] | Minimum [Member] | Third Convertible Secured Term Note and Warrants [Member] | |||||||||||
Debt instrument interest rate | 8.50% | ||||||||||
Hankey Capital LLC [Member] | Minimum [Member] | First Credit Facility Convertible Secured Term Note [Member] | |||||||||||
Debt instrument interest rate | 8.50% | ||||||||||
Hankey Capital LLC [Member] | Minimum [Member] | Second Credit Facility Convertible Secured Term Note [Member] | |||||||||||
Debt instrument interest rate | 8.50% | ||||||||||
Hankey Capital LLC [Member] | Minimum [Member] | First, Second and Third Convertible Secured Term Notes [Member] | |||||||||||
Debt instrument conversion price per share | $ 1 | ||||||||||
Hankey Capital LLC [Member] | Maximum [Member] | First, Second and Third Convertible Secured Term Notes [Member] | |||||||||||
Debt instrument conversion price per share | $ 15.80 | ||||||||||
Hankey Capital LLC [Member] | Prime Rate Plus [Member] | Third Convertible Secured Term Note and Warrants [Member] | |||||||||||
Debt instrument interest rate | 4.00% | ||||||||||
Hankey Capital LLC [Member] | Prime Rate Plus [Member] | First Credit Facility Convertible Secured Term Note [Member] | |||||||||||
Debt instrument interest rate | 4.00% | ||||||||||
Hankey Capital LLC [Member] | Prime Rate Plus [Member] | Second Credit Facility Convertible Secured Term Note [Member] | |||||||||||
Debt instrument interest rate | 4.00% | ||||||||||
First and Second Secured Convertible Notes and Warrants [Member] | Hankey Capital LLC [Member] | |||||||||||
Convertible promissory note amount | $ 7,000,000 | $ 7,000,000 | $ 7,000,000 | ||||||||
Debt maturity date | Dec. 31, 2019 | Dec. 31, 2019 | |||||||||
Debt instrument conversion price per share | $ 15.80 | $ 1 | $ 1 | ||||||||
Warrant to purchase shares of common stock | 585,443 | 585,443 | |||||||||
Warrant exercise price | $ 15.80 | $ 15.80 | |||||||||
Warrant maturity | 2 years | 5 years | 5 years | ||||||||
Loan commitment fee amount | $ 210,000 | $ 210,000 | |||||||||
Percentage of commitment fee paid | 3.00% | 3.00% | |||||||||
Offering costs | $ 594,550 | $ 594,550 | |||||||||
Debt discount amortization | $ 2,891,409 | ||||||||||
Debt conversion, description | The Company determined that the extension of the convertible notes' maturity dates and the warrants' expiration dates resulted in a debt extinguishment for accounting purposes since the change in fair value of the warrants as a result of the extension of their expiration dates was more than 10% of the original value of the convertible notes. | ||||||||||
First and Second Secured Convertible Notes and Warrants [Member] | Hankey Capital LLC [Member] | Extended Maturity [Member] | |||||||||||
Debt maturity date | Dec. 31, 2019 | ||||||||||
First and Second Secured Convertible Notes and Warrants [Member] | Hankey Capital LLC [Member] | Minimum [Member] | |||||||||||
Debt instrument interest rate | 8.50% | 8.50% | |||||||||
First and Second Secured Convertible Notes and Warrants [Member] | Hankey Capital LLC [Member] | Prime Rate Plus [Member] | |||||||||||
Debt instrument interest rate | 4.00% | 4.00% |
Notes Payable - Related Party -
Notes Payable - Related Party - Schedule of Notes Payable (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Net Notes payable | $ 11,200,000 | $ 9,000,000 |
First Secured Convertible Note [Member] | ||
Issue Date | Oct. 24, 2014 | |
Maturity Date | Dec. 31, 2019 | |
Interest Rate | 9.00% | |
Secured Convertible Note | $ 5,000,000 | 5,000,000 |
Second Secured Convertible Note [Member] | ||
Issue Date | May 4, 2015 | |
Maturity Date | Dec. 31, 2019 | |
Interest Rate | 9.00% | |
Secured Convertible Note | $ 2,000,000 | 2,000,000 |
Third Secured Convertible Note [Member] | ||
Issue Date | Feb. 24, 2016 | |
Maturity Date | Dec. 31, 2019 | |
Interest Rate | 9.00% | |
Secured Convertible Note | $ 2,000,000 | 2,000,000 |
First Credit Facility [Member] | ||
Issue Date | Mar. 19, 2019 | |
Maturity Date | Dec. 31, 2019 | |
Interest Rate | 9.00% | |
Secured Convertible Note | $ 2,000,000 | |
Second Credit Facility [Member] | ||
Issue Date | Sep. 19, 2019 | |
Maturity Date | Sep. 19, 2020 | |
Interest Rate | 9.00% | |
Secured Convertible Note | $ 2,000,000 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | Aug. 01, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | |
Preferred stock, shares issued | |||
Common stock, shares authorized | 100,000,000 | 100,000,000 | |
Common stock, shares outstanding | 30,682,590 | 26,448,881 | |
Number of shares of common stock issued as collateral | 4,255,319 | ||
Number of shares of cancelled common shares | 21,610 | ||
Warrants [Member] | |||
Number of warrants exercised | |||
Number of warrants expired | 16,506 | ||
Intrinsic value of outstanding warrants | $ 0 |
Stockholders' Deficit - Schedul
Stockholders' Deficit - Schedule of Warrant Activity (Details) - Warrants [Member] | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Number of Warrants Outstanding, Beginning balance | shares | 845,096 |
Number of Warrants, Granted | shares | |
Number of Warrants, Forfeited/Expired | shares | (16,506) |
Number of Warrants, Exercised | shares | |
Number of Warrants Outstanding, Ending balance | shares | 828,590 |
Weighted Average Exercise Price, Outstanding, Beginning | $ / shares | $ 4.94 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Forfeited/Expired | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Outstanding, Ending | $ / shares | $ 4.92 |
Weighted Average Life (Years), Outstanding, Beginning | 1 year 4 months 24 days |
Weighted Average Life (Years), Granted | 0 years |
Weighted Average Life (Years), Forfeited/Expired | 0 years |
Weighted Average Life (Years), Exercised | 0 years |
Weighted Average Life (Years), Outstanding. Ending | 8 months 5 days |
Stockholders' Deficit - Sched_2
Stockholders' Deficit - Schedule of Outstanding Vested and Unexercised Common Stock Warrants (Details) - Unexercised Common Stock Warrants [Member] | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Number of Warrants | 808,590 |
2010 [Member] | |
Exercise Price | $ / shares | $ 4.40 |
Number of Warrants | 22,659 |
Expiration Date | Feb. 4, 2020 |
April 2013 [Member] | |
Exercise Price | $ / shares | $ 10 |
Number of Warrants | 5,000 |
Expiration Date | Apr. 28, 2020 |
September 2013 (1) [Member] | |
Exercise Price | $ / shares | $ 10 |
Number of Warrants | 5,000 |
Expiration Date | Sep. 4, 2020 |
September 2013 (2) [Member] | |
Exercise Price | $ / shares | $ 10 |
Number of Warrants | 2,500 |
Expiration Date | Sep. 20, 2020 |
November 2013 [Member] | |
Exercise Price | $ / shares | $ 10 |
Number of Warrants | 7,500 |
Expiration Date | Nov. 14, 2020 |
July 2014 [Member] | |
Exercise Price | $ / shares | $ 10 |
Number of Warrants | 50,000 |
Expiration Date | Sep. 30, 2020 |
September 2014 (1) [Member] | |
Exercise Price | $ / shares | $ 16.20 |
Number of Warrants | 62,500 |
Expiration Date | Aug. 31, 2021 |
September 2014 (2) [Member] | |
Exercise Price | $ / shares | $ 10 |
Number of Warrants | 11,800 |
Expiration Date | Sep. 18, 2021 |
September 2014 (3) [Member] | |
Exercise Price | $ / shares | $ 10 |
Number of Warrants | 8,959 |
Expiration Date | Sep. 29, 2021 |
October 2014 [Member] | |
Exercise Price | $ / shares | $ 15.80 |
Number of Warrants | 316,456 |
Expiration Date | Oct. 23, 2019 |
May 2015 [Member] | |
Exercise Price | $ / shares | $ 15.80 |
Number of Warrants | 189,874 |
Expiration Date | May 4, 2020 |
February 2016 [Member] | |
Exercise Price | $ / shares | $ 20.50 |
Number of Warrants | 146,342 |
Expiration Date | Feb. 23, 2021 |
Stock-based Compensation (Detai
Stock-based Compensation (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2015 | |
Number of options exercised | |||
Number of options cancelled/forfeited | 332,512 | 1,306 | |
Number of options, granted | 54,909 | ||
Fair value of stock option | $ 50,000 | ||
Stock-based compensation expense | 46,566 | $ 492,754 | |
Unrecognized compensation cost related to unvested stock options | $ 25,175 | ||
Compensation, expected to be recognized over a weighted average period | 2 months 30 days | ||
Consultants [Member] | Stock Options [Member] | |||
Stock-based compensation expense | $ 58,881 | $ (1,130,189) | |
2015 Equity Incentive Plan [Member] | |||
Shares authorized and reserved for issuance | 1,400,000 | ||
Percentage of stock issued and outstanding | 5.00% |
Stock-based Compensation - Sche
Stock-based Compensation - Schedule of Stock Option Activity (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Number of Options Outstanding, Beginning balance | 843,648 | |
Number of Options, Granted | 54,909 | |
Number of Options, Forfeited | (332,512) | (1,306) |
Number of Options, Exercised | ||
Number of Options Outstanding, Ending balance | 566,045 | |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ 16.43 | |
Weighted Average Exercise Price, Granted | 0.94 | |
Weighted Average Exercise Price, Forfeited | 16.64 | |
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Outstanding, Ending balance | $ 14.80 | |
Weighted Average Life (Years), Outstanding, Beginning balance | 6 years 6 months 21 days | |
Weighted Average Life (Years), Granted | 10 years | |
Weighted Average Life (Years), Forfeited | 4 years 11 months 26 days | |
Weighted Average Life (Years), Exercised | 0 years | |
Weighted Average Life (Years), Outstanding. Ending balance | 5 years 10 months 10 days | |
Aggregate Intrinsic Value, Outstanding, Beginning balance | ||
Aggregate Intrinsic Value, Outstanding, Ending balance |
Stock-based Compensation - Sc_2
Stock-based Compensation - Schedule of Outstanding Stock Options (Details) | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Number of Options | 566,045 |
September 2014 [Member] | |
Exercise price | $ / shares | $ 15.90 |
Number of Options | 58,307 |
Expiration date | Dec. 27, 2025 |
August 2015 [Member] | |
Exercise price | $ / shares | $ 15.90 |
Number of Options | 104,060 |
Expiration date | Dec. 27, 2025 |
September 2015 [Member] | |
Exercise price | $ / shares | $ 15.90 |
Number of Options | 20,000 |
Expiration date | Dec. 27, 2025 |
November 2015 [Member] | |
Exercise price | $ / shares | $ 15.90 |
Number of Options | 122,464 |
Expiration date | Dec. 27, 2025 |
December 2015 [Member] | |
Exercise price | $ / shares | $ 15.90 |
Number of Options | 27,204 |
Expiration date | Dec. 27, 2025 |
January 2016 [Member] | |
Exercise price | $ / shares | $ 15.90 |
Number of Options | 127,581 |
Expiration date | Jan. 9, 2026 |
March 2016 [Member] | |
Exercise price | $ / shares | $ 20.50 |
Number of Options | 5,400 |
Expiration date | Feb. 24, 2021 |
May 2016 [Member] | |
Exercise price | $ / shares | $ 20.50 |
Number of Options | 26,915 |
Expiration date | May 26, 2026 |
September 2016 [Member] | |
Exercise price | $ / shares | $ 20.50 |
Number of Options | 9,933 |
Expiration date | May 31, 2026 |
January 2017 [Member] | |
Exercise price | $ / shares | $ 20.50 |
Number of Options | 5,356 |
Expiration date | Jan. 1, 2027 |
January 2018 [Member] | |
Exercise price | $ / shares | $ 19.70 |
Number of Options | 3,916 |
Expiration date | Jan. 1, 2028 |
January 2019 [Member] | |
Exercise price | $ / shares | $ 0.94 |
Number of Options | 54,909 |
Expiration date | Jan. 1, 2029 |
Stock-based Compensation - Sc_3
Stock-based Compensation - Schedule of Assumptions Using Black-Scholes Option Pricing Model (Details) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Risk free interest rate | 2.554% | |
Risk free interest rate, minimum | 2.302% | |
Risk free interest rate, maximum | 2.79% | |
Expected life (in years) | 6 years 2 months 27 days | |
Expected Volatility | 169.87% | |
Expected Volatility, minimum | 169.33% | |
Expected Volatility, maximum | 173.79% | |
Expected dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Expected life (in years) | 6 years 2 months 27 days | |
Maximum [Member] | ||
Expected life (in years) | 7 years 9 months |
Stock-based Compensation - Sc_4
Stock-based Compensation - Schedule of Non-vested Options (Details) | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Non-vested Options, Beginning Balance | shares | 117,464 |
Number of Non-vested Options, Granted | shares | 54,909 |
Number of Non-vested Options, Forfeited | shares | (82,364) |
Number of Non-vested Options, Vested | shares | 41,182 |
Number of Non-vested Options, Ending Balance | shares | 131,191 |
Number of Non-vested Options, Exercisable | shares | 434,854 |
Number of Non-vested Options, Outstanding | shares | 566,045 |
Weighted Average Fair Value at Grant Date, Beginning Balance | $ / shares | $ 14.61 |
Weighted Average Fair Value at Grant Date, Granted | $ / shares | 0.91 |
Weighted Average Fair Value at Grant Date, Forfeited | $ / shares | 13.55 |
Weighted Average Fair Value at Grant Date, Vested | $ / shares | 0.91 |
Weighted Average Fair Value at Grant Date, Ending Balance | $ / shares | 1,472 |
Weighted Average Fair Value at Grant Date, Exercisable | $ / shares | 13.66 |
Weighted Average Fair Value at Grant Date, Outstanding | $ / shares | $ 13.91 |
Deferred Compensation (Details
Deferred Compensation (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Cumulative funding to be received | $ 4,369,979 | ||
Deferred compensation | $ 177,500 | $ 441,667 | |
October 2016 Note Purchase Agreement [Member] | |||
Percentage of earned deferred compensation | 20.00% | ||
October 2016 Note Purchase Agreement [Member] | Directors [Member] | |||
Percentage of earned deferred compensation | 50.00% | ||
Cumulative funding to be received | $ 5,000,000 | ||
Separation Agreement [Member] | |||
Deferred compensation forfeited and written off | $ 379,167 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Nov. 12, 2019 | Sep. 30, 2019 |
Proceeds from line of credit | $ 2,000,000 | |
Subsequent Event [Member] | ||
Proceeds from line of credit | $ 35,000 | |
October 24, 2014 [Member] | ||
Convertible promissory note amount | $ 5,000,000 | |
Debt maturity date | Dec. 31, 2021 | |
May 24, 2015 [Member] | ||
Convertible promissory note amount | $ 2,000,000 | |
Debt maturity date | Dec. 31, 2021 | |
February 24, 2016 [Member] | ||
Convertible promissory note amount | $ 2,000,000 | |
Debt maturity date | Dec. 31, 2021 | |
March 19, 2019 [Member] | ||
Convertible promissory note amount | $ 2,000,000 | |
Debt maturity date | Dec. 31, 2021 | |
September 19, 2019 [Member] | ||
Convertible promissory note amount | $ 1,100,000 | |
Debt maturity date | Dec. 31, 2021 |